Originally Posted by
forgot to bid
The best way to manage your supply chain is to own it.
For an airline to do this, brilliant. Hope they do it. But I bet we'd really start to tanker out of the hubs!
FTB, I think the term you are looking for is "vertical integration."
Ford's River Rouge plant has always amazed me and it built my last two F150's. According to the tour, iron ore comes in off a barge and gets dumped at the steel mill at one end of the facility ... two weeks later a new truck rolls out the other end.
The way Jet fuel is distributed, we would not have to tanker. Think of the infrastructure as a corkage fee for bringing your own bottle of wine to a restaurant. We buy fuel under contract, then the distributor is paid so many cents for serving it to the airplane. The fuel we buy isn't physical, we are trading contracts and cash. It becomes physical at the airplane. "Our fuel" could end up in a number of different places and for different airlines. We'd simply have a way to create fuel capacity and sell it on the open market with the advantage being a reduction of the "crack spread" that refiners are currently charging us. Here's a good article:
The Drastic Impact to Airlines and Passengers From Fuel Price Increases - Seeking Alpha